Pricing an App.

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b33fy
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Pricing an App.

Postby b33fy » Mon Mar 25, 2019 3:36 pm

I’m currently developing an App which we want to commercialise. It a healthcare quality assurance tool for healthcare providers. I’ve a number of options to cost up, whilst I can do non staff and staffing costs and factor in development costs I’m not sure how to go about putting a “retail” cost to the App.

The options I need to cost are.

Cost to provide a stand alone installation including initial IT support and training package. Once done they just get on with it.

Cost per head per month if we were to host the app for other organisations to access.

Partnership approach with commercial organisation.

Block contracts/selling to commissioners for use to their providers.

My thinking is cost is based on whatever the market will tolerate. Though a starting point would be helpful. Any thoughts or pointers would be greatfully received.
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Re: Pricing an App.

Postby Tony B » Mon Mar 25, 2019 3:57 pm

Think the problem with all your options apart from the first one is that you would need to spread your costs across your predicted volume of purchases - which isn't easy unless its an App that all of the healthcare providers are knowingly going to buy!

Your first option "Once done they just get on with it" allows you to charge your cost plus a margin and then gives someone else the headache of making sure enough are sold to recover their outlay

heads or tails really - do you want to recover a set amount or take a gamble on a per unit price?

With my products the most difficult bit is producing a coststack, once that's done adding a margin and forecasting sales is easy - well - for my products anyway (which isn't Apps)

good luck!

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Re: Pricing an App.

Postby b33fy » Mon Mar 25, 2019 4:36 pm

Tony B wrote:Think the problem with all your options apart from the first one is that you would need to spread your costs across your predicted volume of purchases - which isn't easy unless its an App that all of the healthcare providers are knowingly going to buy!

Your first option "Once done they just get on with it" allows you to charge your cost plus a margin and then gives someone else the headache of making sure enough are sold to recover their outlay

heads or tails really - do you want to recover a set amount or take a gamble on a per unit price?

With my products the most difficult bit is producing a coststack, once that's done adding a margin and forecasting sales is easy - well - for my products anyway (which isn't Apps)

good luck!


Thanks Tony, very helpful.. what is a cost stack? We class cost as staff or non staff as they are our biggest cost.

Measuring demand is the tricky bit. Maybe the way forward would be a minimum sign up to make it viable and as more come on board reduce the monthly cost to all, with a view to achieving a set target monthly income.. does that make sense?
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Re: Pricing an App.

Postby Tony B » Mon Mar 25, 2019 5:50 pm

Isn’t that just crowd funding? Which does work as well!

Cost stack is just a term to produce a list of all the individual costs that go into a product - they could be one off or recurring costs, translated into my products a one off cost is normally added up to make the purchase price (sign up price) and rucurring costs make up an ongoing rental (monthly income) - it doesn’t have to be exactly like that though

Start with writing down everything that makes up your app and name each item, then work out a cost against each item

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Re: Pricing an App.

Postby b33fy » Mon Mar 25, 2019 6:22 pm

Tony B wrote:Isn’t that just crowd funding? Which does work as well!

Cost stack is just a term to produce a list of all the individual costs that go into a product - they could be one off or recurring costs, translated into my products a one off cost is normally added up to make the purchase price (sign up price) and rucurring costs make up an ongoing rental (monthly income) - it doesn’t have to be exactly like that though

Start with writing down everything that makes up your app and name each item, then work out a cost against each item


Thinking out loud, Makes sense again.. we will be running get the app in house for our own use regardless. We can probably support a small number of users, recurring costs would be the same with none or a “few users” ie two or three organisations. Any more then recurring costs would jump to approx 100k a year (techie plus admin) plus hosting costs.. this I think can sustain a high number of users (organisations)

I’m now thinking one off initial purchase price which would include consultation, access, setup and training. Then monthly rental per user, more users cheaper rate per head. This can mirror your approach to cover one off and recurring costs.

Thanks again Tony.
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Re: Pricing an App.

Postby Nash » Mon Mar 25, 2019 8:10 pm

As we've discussed before Mike SaaS may be a better option as there is a smaller cost up front for the user and then charge either a transactional cost or as seems to be the trend recently charge a monthly subscription charge. With either of these options the user will expect a support package, update path and new features so you will need to have a development path.

I know you have tested the product a lot but I would say you need to consider the platform it will sit on outside of the NHS, the updates of all the products it sits around, the Operating System it runs on and those updates to ensure it continyes to work. Also ongoing training has to be considered as it's a user lead system.

If your intention is to install train and walk then the value diminishes.
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Re: Pricing an App.

Postby b33fy » Mon Mar 25, 2019 9:21 pm

Nash wrote:As we've discussed before Mike SaaS may be a better option as there is a smaller cost up front for the user and then charge either a transactional cost or as seems to be the trend recently charge a monthly subscription charge. With either of these options the user will expect a support package, update path and new features so you will need to have a development path.

I know you have tested the product a lot but I would say you need to consider the platform it will sit on outside of the NHS, the updates of all the products it sits around, the Operating System it runs on and those updates to ensure it continyes to work. Also ongoing training has to be considered as it's a user lead system.

If your intention is to install train and walk then the value diminishes.


Thanks Neil, helpful. Didn’t really understand the SaaS model when we discussed.. and couldn’t remember the term you used, so thanks for mentioning it again and google is your friend, some really helpful guidance on setting up a SaaS based provision. Some similar themes to costing as Tony’s mentioned.

One option is install, train(the trainer) and minimum support, but not the best option imo. Hosting will give the biggest return though potentially the biggest headache.
Commercial partnership could be a good compromise.

D day has come quickly 15th April.. got to present an options appraisal to the deputy chief exec and IT Director. Got to nail it so lots of reading googling and writing..
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Re: Pricing an App.

Postby b33fy » Fri Mar 29, 2019 2:21 pm

I think I’ve managed to crack this, gone for SaaS as the preferred option, web based, single app, with multi tentant architecture with support. Income options include heavy front loading of initial cost to reduce monthly subscriptions.. potential freemium approach offering limited functionality over limited time to pump prime customer base.

Will post up outcome as and when.
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